Wholesaling or multi-family house hacking

[Abe Louis]

WriteI want to get started this year in real estate. I am trying to decide between the two strategies and which will be best. I will be doing a cash out refy of my small condo and will have between 10k and 15k to start with.

First, I live in the Denver area and will be investing within a reasonable driving distance to where I stay. I work 5 day and 50 hours per week. I am typically not off until 8pm or 11pm on days that I work. I ultimately want to buy and hold/sell multi-family properties (eventually large ones).

OK so if I want to get into multi-family why even think about wholesaling right? Well here is my thinking… becoming a wholesaler will allow me to develop skills and get great at finding as negotiating deals as well as meeting active investors while I’m putting deals together. The big benefit I see is that while wholesaling is clearly hard work and time consuming, it can allow me to grow that initial capital into a more comfortable amount for eventually investing into buy and hold properties. The concern I have is wondering if my work schedule will get in the way of being able to be a successful wholesaler (as I am there a lot and I do not have a ton of flexibility at work to be able to come and go). Also if I spend my capital wrong and can’t get deal flow generated, it might take while to come up with another lump sum like that for some time.

The other strategy goes like this. I take that 10-15k and try to find a 4 plex to buy with an FHA loan. I can rent out my small condo (and cash flow it) as well as move into one unit of the 4 plex and rent out the other three. This strategy is appealing because I can have 4 rental units as soon as I can close and get the tenants. It will allow me to immediately gain experience in property and tenant management. My concern here is that in my area, even with an FHA loan it would take probably all of this money to close on a deal like that and then I will have little in the way of reserves to run the property which makes me nervous. In addition I know that I will be most likely highly dependent on any equity within the property (which I will have almost none) as to when I can acquire another property.

Both sides have positives and negatives (which is why I’m posting it)

What do you guys think?

PS this is my first ever post